NEWTON, Mass.--(BUSINESS WIRE)--Feb. 3, 2003 - Hospitality Properties Trust (NYSE: HPT) today announced its results of operations for the quarter and year-ended December 31, 2002, as follows:
(amounts in thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Net income before
extraordinary item $38,736 $37,166 $143,802 $131,956
Net income $38,736 $37,166 $142,202 $131,956
Net income available for
common shareholders $36,508 $35,385 $134,630 $124,831
Funds from operations ("FFO") $62,414 $58,319 $247,544 $230,581
Cash available for
distribution ("CAD") $53,745 $49,919 $210,894 $192,999
Common distributions $45,034 $44,386 $179,504 $168,447
Per common share amounts:
Net income available for
common shareholders $0.58 $0.57 $2.15 $2.12
Funds from operations ("FFO") $1.00 $0.93 $3.96 $3.91
Cash available for
distribution ("CAD") $0.86 $0.80 $3.37 $3.27
Common distributions $0.72 $0.71 $2.87 $2.83
Weighted average common
shares outstanding 62,547 62,516 62,538 58,986
Hospitality Properties Trust is a REIT headquartered in Newton, Massachusetts which invests in hotels. HPT currently has investments of approximately $2.8 billion in 251 hotels located in 37 states.
Hospitality Properties Trust
STATEMENT OF INCOME, FUNDS FROM OPERATIONS
AND CASH AVAILABLE FOR DISTRIBUTION
(amounts in thousands, except per share data)
Quarter Quarter Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Revenues:
Minimum rent $62,224 $58,381 $245,197 $236,876
Percentage rent 2,291 3,414 2,291 3,414
Hotel operating revenues (1) 19,410 17,338 79,328 37,982
FF&E reserve income (2) 4,892 4,972 21,600 24,652
Interest income 19 272 290 953
Total revenues 88,836 84,377 348,706 303,877
Expenses:
Hotel operating expenses (1) 11,910 10,446 50,515 24,375
Interest (including
amortization of deferred
financing costs of $644,
$605, $2,650 and
$2,417, respectively) 10,419 10,064 42,424 41,312
Depreciation and amortization 24,296 23,370 96,474 91,395
General and administrative 3,475 3,331 15,491 14,839
Total expenses 50,100 47,211 204,904 171,921
Net income before
extraordinary item 38,736 37,166 143,802 131,956
Extraordinary item - loss on
early extinguishment of debt -- -- 1,600 --
Net income 38,736 37,166 142,202 131,956
Preferred dividends 2,228 1,781 7,572 7,125
Net income available for
common shareholders $36,508 $35,385 $134,630 $124,831
Calculation of FFO (3):
Net income available for
common shareholders $36,508 $35,385 $134,630 $124,831
Add: FF&E deposits not in
net income (2) 3,507 2,977 14,840 14,355
Depreciation and
amortization 24,296 23,370 96,474 91,395
Extraordinary item -- -- 1,600 --
Less: Previously recognized
percentage rent
in FFO (4) 1,897 3,413 -- --
Funds from operations ("FFO") $62,414 $58,319 $247,544 $230,581
Calculation of CAD (3):
FFO $62,414 $58,319 $247,544 $230,581
Add: Non-cash expenses 732 419 3,900 3,313
Less: FF&E reserve income (1)(2) 5,894 5,842 25,710 26,540
FF&E deposits not in net
income (2) 3,507 2,977 14,840 14,355
Cash available for
distribution ("CAD") $53,745 $49,919 $210,894 $192,999
Weighted average common
shares outstanding 62,547 62,516 62,538 58,986
Per common share amounts:
Net income available for
common shareholders $0.58 $0.57 $2.15 $2.12
FFO $1.00 $0.93 $3.96 $3.91
CAD $0.86 $0.80 $3.37 $3.27
Common dividends declared $0.72 $0.71 $2.87 $2.83
(1) All of our hotels are leased to or operated by third-parties; HPT does not operate hotels. At various times during 2001 and 2002, 18 of our hotels, containing 2,602 rooms, began to be operated by Marriott International under a long-term management contract; most of these hotels were previously leased to Marriott. These hotels are now leased to a 100% subsidiary of ours, as allowed by the REIT Modernization Act which became effective in 2001. Although our long-term management contract with Marriott includes security features which are similar to those under our leases, after a property begins to be operated under a management contract rather than under a lease, our consolidated revenues include hotel sales rather than rental income and our expenses include hotel operating expenses. We have agreed to this new arrangement for a total of 35 hotels, containing 5,382 rooms and expect it to begin for the remaining 17 hotels from time to time prior to June 30, 2004. The amounts in the following table include net revenues over expenses and FF&E escrows of the ten hotels which began to be leased to our subsidiary tenant on June 15, 2001, six hotels which began to be leased to our subsidiary tenant September 7, 2001, and two hotels which began to be leased to our subsidiary tenant on September 6, 2002. During the quarter and year ended December 31, 2002, $2,648 and $5,822, respectively, and in the 2001 periods $1,916 and $1,957, respectively, of hotel operating expenses were funded by Marriott and are reflected as a reduction in hotel operating expenses.
Quarter Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Hotel operating revenues $19,410 $17,338 $79,328 $37,982
Less: Hotel operating expenses 11,910 10,446 50,515 24,375
Net payments by our manager to
our subsidiary tenant 7,500 6,892 28,813 13,607
Less: Payments made into FF&E
Reserve escrows 1,002 870 4,110 1,888
Net $ 6,498 $ 6,022 $24,703 $11,719
(2) Some of the HPT leases provide that FF&E Reserve escrows are owned by HPT. Other leases provide that FF&E Reserve escrows are owned by the tenants and the Company has a security and remainder interest in the escrow accounts. When HPT owns the escrow, generally accepted accounting principles require that payments into the escrow be reported as additional rent. When HPT has a security and remainder interest in the escrow account, deposits are not included in revenue but are included in FFO. CAD excludes all FF&E Reserves.
(3) HPT computes FFO and CAD as shown in the calculations above. HPT considers FFO and CAD to be appropriate measures of performance for a REIT, along with net income, cash flow from operating, investing and financing activities because they provide investors with an indication of a REIT's operating performance and its ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. Neither FFO nor CAD represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO and CAD are two important factors considered by HPT's Board of Trustees in determining the amount of distributions to shareholders.
(4) The Securities and Exchange Commission Staff Accounting Bulletin No. 101 generally requires the Company to recognize percentage rental income received for the first, second and third quarters in the fourth quarter. Although recognition of revenue was deferred until the fourth quarter of each year presented for purposes of calculating net income, the calculations of FFO and CAD included these amounts during the first three quarters.
Hospitality Properties Trust
Key Property Statistics(a)
Year Year
4th 4th Ended Ended
Quarter Quarter Dec. 31, Dec. 31,
2002 2001 % Change 2002 2001 % Change
Hotel Statistics
(33,759 rooms and 247 hotels):
Average Daily
Rate ("ADR") $79.67 $80.60 -1.2% $79.84 $85.70 -6.8%
Occupancy 67.7% 66.2% +2.3% 71.9% 72.3% -0.6%
Revenue per
Available Room
("RevPAR") $53.94 $53.36 +1.1% $57.40 $61.96 -7.4%
(a) Excludes four properties containing 525 rooms, not open for a full
year as of January 1, 2002.
Key Balance Sheet Statistics
December 31, December 31,
2002 2001
Cash $7,337,000 $38,962,000
Real Estate, at cost $2,762,322,000 $2,629,153,000
Debt
Floating rate - Credit
Facility, due 2005 $-- $--
Fixed rate - 8.25% Senior
Notes, due 2005 -- 115,000,000
Fixed rate - 7.00% Senior
Notes, due 2008 149,861,000 149,834,000
Fixed rate - 8.50% Senior
Notes, due 2009 (1) 150,000,000 150,000,000
Fixed rate - 9.125% Senior
Notes, due 2010 49,953,000 49,947,000
Fixed rate - 6.85% Senior
Notes, due 2012 124,151,000 --
$473,965,000 $464,781,000
Book Equity
9.5% Series A Preferred
(3,000,000 shares outstanding) $72,207,000 $72,207,000
8.875% Series B Preferred
(3,450,000 and zero shares
outstanding) 83,306,000 --
Common (62,547,348 and
62,515,940 shares outstanding) 1,489,507,000 1,532,312,000
$1,645,020,000 $1,604,519,000
(1) These notes are expected to be prepaid on February 17, 2003, with a portion of the proceeds from our January 24, 2003, issuance of $175,000,000 of 6.75% Senior Notes, due 2013. This early extinguishment of debt is expected to generate an expense of $2.6 million in the 2003 first quarter due to our write off of related deferred financing costs.